Transcript 2011-13 CHE Higher Education Budget Recommendation House Ways & Means Committee – January 10, 2011

2011-13 CHE Higher Education
Budget Recommendation
House Ways & Means Committee – January 10, 2011
Overview
Priorities and Goals of the Recommendation
Performance Funding Formula
Overview








Operating
Debt Service
Repair and Rehabilitation
Capital
Line Items
Overall Summary
Institution by Institution Impact


2
Priorities and Goals of Recommendation
Provide funding above historical levels for the Performance
Funding Formula
Allocate a portion of the operating base to fund the
Performance Funding Formula
Distribute Performance Funding Formula based on priorities
set forth by the Commission
Meet the budget base targets set forth by the State Budget
Agency
Place Repair and Rehabilitation funding above new capital
projects
Balanced the Performance Funding Formula based on mission
differentiation of each institution
Align Performance Funding Formula outcomes with Reaching
Higher







3
Performance Funding Formula
Established in 2003 with Research Incentive
Grown to 7 metrics used to provide performance funding
to institutions
New situation in 2011-13 budget: No new dollars to
allocate through the Performance Funding Formula
Recommendation stays consistent with the original
development of the formula by creating incentives to
institutions through the formula
Does not focus on penalizing institutions but rewards
increased performance
Allows BSU and ISU to participate in the Successful
Completion of Credit Hours metric






4
Funding the Performance Funding Formula
Across the Board reduction to operating budgets for
each institution of 5% to fund the formula - $61.4 million
Performance Funding Formula will allocate the $61.4
million to institutions that performed well in the funding
formula
Allocation of performance funding is based on:






5
Weighting each performance metric based on Commission
distribution
Funding performance metrics with positive results, did not
penalize institutions with negative performance metrics
ATB reductions and negative formula results would be a
double hit to some institutions
Impact of Performance Funding Formula
Recommendation provides for 5% of the 2011 operating
budget to be used towards Performance Formula Funding



$61.4 million for each year of the biennium
Total 2011 operating budget $1,228.8 million
Highest biennial funding of Performance Funding Formula
since inception – 2003






6
2003-05 Biennium - $12.3 million – 1.0% of total ops budget
2005-07 Biennium - $18.8 million – 1.6% of total ops budget
2007-09 Biennium - $32.7 million – 2.5% of total ops budget
2009-11 Biennium - $19.7 million – 1.6% of total ops budget
2011-13 Biennium - $61.4 million – 5.1% of total ops
budget
History of Performance Funding Formula
2001
2003
2005
2007
Enrollment Change
Enrollment Change
Enrollment Change
Enrollment Change
(credit hours enrolled) (credit hours enrolled) (credit hours enrolled) (credit hours enrolled)
2009
Enrollment Change
(successfully
completed credit
hours)
Inflation Adjustments Inflation Adjustments Inflation Adjustments Inflation Adjustments
Equity Adjustment
Equity Adjustment
Equity Adjustment
Equity Adjustment
Plant Expansion/leases Plant Expansion/leases
Program Adjustment
Research Support
Incentive
Research Support
Incentive
** Red font indicates a performance funding formula
Research Support
Incentive
Change in number of
degrees
Change in On-Time
graduation Rate
Two Year Transfer
Incentive
Research Support
Research Support
Incentive
Incentive
Change in number of Change in number of
degrees
degrees
Change in On-Time
Change in On-Time
graduation Rate
graduation rate
Two Year Transfer
Incentive
Low Income Degree
Low Income Degree
Completion Incentive Completion Incentive
Workforce
Development Incentive
(funding non-credit
coursework)
7
2011
Enrollment Change
(successfully
completed credit
hours)
Enrollment Change
Dual Credit
(successfully
completed credit
hours)
Allocation of Performance Funding Formula
Based on distribution established by the Commission, the
$61.4 million of Performance Funding Formula for each
year of the biennium will be allocated in the following
manner


TOTAL DEGREE ATTAINMENT CHANGE – 60%




TOTAL COMPLETION OF CREDIT HOURS – 25%




8
Low Income Degree Attainment Change – 15%
On-Time Degree Attainment Change – 15%
Change in Overall Degree Attainment – 30%
Successful Completion of Credit Hours – 18.7%
Dual Credit Successful Completion of Credit Hours – 5.5%
Early College Successful Completion of Credit Hours – 0.8%
RESEARCH INCENTIVE – 15%
Performance Funding Formula – High Level
2011-12
2012-13
% of Total
Successful Completion of Credit Hours
$11,459,768
$11,459,768
18.7%
Dual Credit Successful Completion of
Credit Hours
$3,391,500
$3,391,500
5.5%
Early College Successful Completion of
Credit Hours
$508,725
$508,725
0.8%
Low Income Degree Attainment
$9,215,996
$9,215,996
15%
On-Time Degree Change
$9,215,996
$9,215,996
15%
Change in Degrees Attained
$18,431,991
$18,431,991
30%
Research Incentive
$9,215,996
$9,215,996
15%
$61,439,971
$61,439,971
100.0%
TOTAL
- 60% of the Performance Funding Formula, or $36.9 million, will go toward change in
degree attainment
- 25% of the Performance Funding Formula, or $15.4 million, will go toward successful
completion of credit hours
9
Institutional Impact of Performance Funding
Formula – Operating Only
2011-2012
2012-2013
% of Total
$791,858
$791,858
1.3%
Indiana University
$13,524,352
$13,524,352
22.0%
Indiana State University
$2,443,493
$2,443,493
4.0%
Ivy Tech Comm. College
$21,840,961
$21,840,961
35.5%
Purdue University
$17,001,952
$17,001,952
27.7%
University of Southern IN
$3,133,064
$3,133,064
5.1%
Vincennes University
$2,704,291
$2,704,291
4.4%
$61,439,971
$61,439,971
100.0%
Ball State University
TOTAL
- Uses 100% of each performance metric for each year of the biennium
- Only provides for positive performance metric results, does not include negative
performance metric results (results are defaulted to $0)
- Funded from a 5% across the board reduction to each institution/campus
10
Overview - Operating




Operating budget is impacted by the Performance
Funding Formula
Recommendation reduces operating budget by 5% to
fund Performance Funding Formula
Recommendation also reduces operating budget by 1.1%
to account for the $13.7 million reduction in 2011 that is
part of the State Budget Agency budget base target
Total net change in operating budget from 2011 to 2012
and 2013 is $13.7 million, the $61.4 million of
Performance Funding Formula is reallocated among
institutions based on performance
11
Operating Budgets General Fund – High Level
General Fund
2011 Operating Appropriation
$1,228,799,414
2011 Spending Reduction
($13,718,408)
Budget Agency Base
$1,215,081,006
CHE Base Adjustment
$13,718,408
6.1% ATB Reduction*
($75,158,379)
New CHE Base
$1,153,641,035
Performance Funding
2012 & 2013 Appropriations
$61,439,971
$1,215,081,006
* 6.1% reduction includes $13.7 million (1.1%) from 2011
reduction and $61.4 million (5%) for Performance Funding
Formula
12
Reduction to USI, Ivy
Tech and BSU as part of
$150 million cut
Add $13.7 million back
to allow for fair
distribution of reduction
$61.4 million for 5%
ATB and $13.7 million
for base target
Represents a 1.1%
reduction in the overall
operating appropriation
Historical Operating Budget – General Fund
($’s in thousands)
$1,300.0
$13.7M General Fund Spending
Reduction as part of $150M overall
cut
$1,280.0
$1,260.0
$1,240.0
$1,220.0
$1,200.0
$1,180.0
$1,160.0
$1,140.0
$1,120.0
2006
2007
2008
Budget
13
2009
Spend
2010
2011
2011-13
Base
CHE Operating Recommendation Comparison
Recommendation v.
2011 Appropriation
Recommendation v.
2011 Spending
Ball State University
-5.5%
-3.3%
Indiana University
-3.2%
-3.2%
Indiana State University
-2.7%
-2.7%
Ivy Tech Comm. College
6.3%
12.6%
Purdue University
-0.8%
-0.8%
University of Southern IN
1.9%
4.7%
Vincennes University
1.2%
1.2%
TOTAL
-1.1%
0.0%
Most budget comparisons are made to current year spending levels.
Higher Education operating budgets were reduced by $13.7 M in
aggregate for 2011, spending less than what was appropriated.
14
Overview – Debt Service






Budget target from Budget Agency is the 2011
appropriation - $177.3 million
Funds previously issued debt for capital projects approved
by CHE, the Budget Agency and the Governor
Funds all capital projects approved by the Commission up
to the November 2010 meeting
All other General Assembly authorized projects not
approved by CHE are not funded at this time
No newly requested capital projects are funded in this
recommendation
Surplus funds available in debt services will be used to
fund Repair and Rehabilitation
15
Debt Service General Fund – High Level
General Fund
2011 Operating Appropriation
$177,272,386
2011 Spending Reduction
-
Budget Agency Base
$177,272,386
Adjustment to Debt Service
($16,189,250)
2012 Appropriations
$161,083,136
Adjustment to Debt Service
2013 Appropriations
($6,280,908)
$154,802,228
- 2011 to 2012 appropriation is 9.1% less
- 2012 to 2013 appropriation is 3.9% less
- 2011 to 2013 appropriation is 12.7% less
16
Only funds capital
projects previously
approved by CHE.
Does not include
funding for any newly
requested capital
projects
Higher Education Debt Service Appropriations and Est. Spend
$200,000,000
$180,000,000
$160,000,000
$177.3 million debt service
2011 appropriation
$140,000,000
$120,000,000
$100,000,000
$80,000,000
$60,000,000
$40,000,000
$20,000,000
$Current Fee Replacement
17
Projects Approved by CHE Nov. 2010
Pending Projects
2011-13 New Capital Projects*
Overview – Repair and Rehabilitation




Recommendation – Fund Repair and Rehabilitation with
surplus funds from debt service and line items and stay
within the Budget Agency budget target
Provides for general fund dollars to be used towards
Repair and Rehabilitation
For 2009-2011, no general funds were available for Repair
and Rehabilitation. ARRA funds were used during the
biennium totaling $31 million
Repair and Rehabilitation funding formula used to
calculate overall need and then funding is adjusted to fit
within Budget Agency target
18
Repair and Rehabilitation General Fund – High
Level
General Fund
2011 Operating Appropriation
-
2011 Spending Reduction
-
Budget Agency Base
-
CHE Base Adjustment
-
New CHE Base
-
Adjustment to R&R
$22,558,475
2012 Appropriations
$22,558,475
Adjustment to R&R
2013 Appropriations
$6,715,271
$29,273,746
- Total R&R funding for biennium - $51.8 million
- Represents 34.0% of R&R formula funded
19
Historical R&R Funding 1999-2013 –
General Fund
$160,000,000
$140,000,000
* Appropriation and disbursements
include funding related to payment delay
above formula driven R&R
$120,000,000
$100,000,000
$80,000,000
$60,000,000
$40,000,000
$20,000,000
$1999-01
Formula Total
20
2001-03
2003-05
CHE Recommendation
2005-07*
2007-09*
Appropriated Total
2009-11
Distributed
2011-13
Overview – Capital


Recommendation – No new, state funded, fee
replacement eligible capital projects for the 2011-13
biennium
Institution requests for new capital for 2011-13 was $522
million




$267.9 million for renovation related projects
$254.1 million for new capital structures or additions
Total estimated fee replacement starting in 2013 would
be $45.5 million
Only $20 million, or 3.8%, was provided as institutional
match for the $522 million in capital projects
21
Historical Capital Project Funding
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$1995-97
* $’s in thousands
22
1997-99
1999-01
University Request
2001-03
2003-05
2005-07
CHE Recommendation
2007-09
2009-11
GA Approved
2011-13
Overview – Line Items

Line items are specific programs, services or allocations:







2011 spending plans reduced line items by approximately $29.9
million, General and Dedicated Funds
Recommendation is to reduce line items by 15%, unless reductions
were previously made as part of the 2011 spending plan or
dedicated funds



University line items – each institution might have various line items
SSACI – student grants and awards
Leases – Dept. of Administration funding for lease payments related to
state funded buildings
Budget Agency – various line items appropriated to SBA
CHE – administration and TransferIN funding
15% reduction results in approximately $6.4 million
SSACI is not part of the 15% reduction, reduced only $1.8M from 2011,
mostly in administration. Major grants were held flat from 2011
Surplus funds would be shifted to Repair and Rehabilitation
23
Line Items General and Dedicated Funds –
High Level
General & Dedicated Funds
2011 Operating Appropriation
$355,510,365
2011 Spending Reduction
($29,852,796)
Budget Agency Base
$325,657,569
15% CHE Adjustment
($6,369,225)
2012 Appropriations
Adjustment
2013 Appropriations
$319,288,344
($434,363)
$318,853,981
- 2011-13 appropriation recommendation includes $500K for TransferIN
related to e-transcript costs
- Adjustment between 2012 and 2013 is a reduction in lease costs
associated with Animal Disease Lab
24
Overall Higher Education Budget
Recommendation 2011-13
2011
Appropriation
Base
Reductions
SBA Base
2012 Proj.
Budget
2013 Proj.
Budget
$1,228,799,414
($13,718,408)
$1,215,081,006
$1,215,081,006
$1,215,081,006
Debt Service
$177,272,386
$0
$177,272,386
$161,083,136
$154,802,228
Repair &
Rehabilitation
$0
$0
$0
$22,558,475
$29,273,746
University Line
Items
$46,568,703
($636,729)
$45,931,974
$39,657,660
$39,657,660
SSACI
$268,731,930
($1,831,170)
$266,900,760
$266,900,760
$266,900,760
Other Line
Items
$40,209,732
($27,384,897)
$12,824,835
$12,729,924
$12,295,561
$1,761,582,165
($43,571,204)
$1,718,010,961
$1,718,010,961
$1,718,010,961
Operating
TOTAL
- Total % change from 2011 Spend to 2013 is 0.0%
- Operating:
0.0%
- Debt Service:
(12.7%)
- All Line Items:
(2.1%)
25
State Reductions to Higher Education

43 states have implemented cuts to public colleges/universities









Alabama – 2010-11 cuts have led to tuition increases of 8% to 23%
Arizona – 9% increase in tuition and 20% increase in fees. 2.75% reduction in
state-funded salary. Enacted payment delays of $100 million in 2011
Colorado - $61.5 million reduction in 2011
Georgia – cut state funding for higher education by $220 million in FY11
Idaho – Imposing furloughs on 2,600 employees, cut state support by 7.8% in
2011
Illinois – FY 2011, cut $100 million from higher education
Michigan – Reduced state student aid by $135 million (61%), $100 million in
other areas of higher education
Minnesota – 9,400 students will lose financial aid from the state, those with aid
will drop by 19%, FY 2011 - $146 million cut to higher education
Texas – FY 2011, 5% across the board cut, $439 million
Sources: Center on Budget and Policy Priorities – Nov 2010 & NCSL Education Cuts
July 2010
26
PERCENT OF TOTAL STATE SUPPORT COMPARED TO
TOTAL INSTITUTION OPERATING REVENUE - ALL FUNDS
40.0%
Assumes 5% of PFF funded
for 2012 and 2013
36.6%
35.4%
35.0%
31.4%
29.4%
30.0%
28.5%
25.0%
35.3%
36.5%
31.3%
20.0%
21.4%
29.3%
28.4%
17.6%
21.4%
15.0%
10.0%
18.3%
18.4%
32.0%
BSU
34.4%
USI
* Gross amount of appropriated funds
27
36.8%
ISU
29.2%
27.2%
VU
2011*
ITCCI
2012
2013
18.7%
IU
17.5%
17.6%
PU
21.5%
STATEWIDE
State Operating Appropriation per Resident FTE
$10,000
$9,000
* PUWL Operating Budget reduced for CES and AES costs
** Gross amount for operating appropration
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
28
2011**
2012
2013